The Government has been taking several measures in consultation with various stakeholders to incentivise greater adoption of digital payments by large sections of society, said Hota.Shelley Singh | ET Bureau | February 26, 2017, 10:22 IST

NEW DELHI: Last few months have seen multiple digital payment platforms launched as the government pushes for `less cash’ economy. National Payments Corporation of India (NPCI), the nodal body for payments, has been behind multiple digital payment innovations, helping people with options to pay digitally. In an e-mail interaction AP Hota, managing director & Chief Executive Officer, NPCI discusses how digital payments are progressing, the rise of the digital economy and more. Edited excerpts:

Government has a set a goal of 2500 crore digital transactions in 2017-18. Do you believe it can be higher than that? How do you see this happening?The Government has been taking several measures in consultation with various stakeholders to incentivise greater adoption of digital payments by large sections of society. China has a population of approximately 1.4 billion and has issued over five billion cards while a country like ours with a population of around 1.25 billion has issued about 800 million cards so far.

Digital payment volumes continue to increase with an annual growth projected to reach 10% for the first time to approximately 425 billion transactions worldwide. Though growth was evident in all regions, it was the developing markets which experienced the highest rate of growth at 16.7% compared with mature markets growing at 6%.

It may be noted that unlike other regions, Indian payment markets are going through a digital disruption with the introduction of new innovative products such as IMPS, UPI, *99# and the introduction of BHIM built over UPI platform. The scale and reach which may not have been possible so far is now likely. It is mainly because of availability of basic payment mechanisms being available not only to the Metros, Tier I and II centres but also in the remotest part of the country driven through feature phone payments.

If we look at the targeted digital transactions including retail and corporate, it can be achieved with the current range of products. The latest technology and developments will ensure that the burden of traditional acceptance infrastructure cost will come down significantly. The mobility of products will result in consumers preferring digital payments for day-to-day requirements.

At present how many digital transactions are made every day or every month?NPCI is projecting over 7 billion interoperable digital transactions using its own products in the current financial year. This excludes digital transactions which do not come to NPCI as a network operator, the overall digital transactions could be in the range of 10 billion in the same fiscal. Post demonetisation, the inorganic growth in digital transactions surpassed the organic growth.

As cash has returned post demonetisation, more people are actually using cash. Why is it that people prefer cash to digital transactions? Do you believe we need more 'ease of use' to enable digital transactions?There are multiple reasons for people to use cash including ease of availability, wider acceptance, convenience and habits. With the availability of cash slowly returning to the normalcy through banks as well ATMs post demonetisation, it is natural that people will use cash. However, the continuous efforts of ecosystem players as well as push from the government through and post demonetisation, has resulted in more people adopting the digital medium. Digital transactions in the current form whether through mobile app (UPI/BHIM) or through other forms such as cards and pre-paid instruments are very easy and convenient to use. Though there is always scope to improve the overall product proposition in digital transactions, changing consumer habits and adapting newer ways will require continuous efforts. The government and RBI’s initiatives starting with PMJDY and now push for digital transactions are steps in right direction.

How many UPI based and BHIM transactions are done per day on an average now and how many was this about one month back?BHIM was launched on December 30, 2016 by Prime Minister Narendra Modi. UPI went live for customers on August 25, 2016. Currently, UPI and BHIM records collective average volume of over 2.5 lakh transactions per day. The average volume of UPI transactions in December 2016 was 1 lakh.

Overall, do you believe the budget gives a boost to digital economy?Yes, the present budget dwells deep into the digital transactions. After demonetisation there has been a significant thrust in mobilising the digital transactions by all entities operating in this space. Additionally, there has been multiple incentives and schemes announced by the government. The Reserve Bank of India (RBI) has also taken measures to boost digital transactions. The budget also mandated a proposal that all government receipts beyond a certain limit should be made through digital means. The upcoming launch of Aadhar Pay, a merchant version of AePS and introduction of additional PoS machines are steps in the right direction. Referral bonus schemes for individuals and cash back schemes for merchants is yet another such initiative to promote mobile based payments through BHIM App.

A key to digital transactions is a good broadband infrastructure. Do you believe there are technology bottlenecks on way to building a digital economy. If so, which are these?The country has seen tremendous growth in digital infrastructure in recent years and technology enhancement has always been a continuous process. As per FICCI/Deloitte report of 2016 on “Broadband Infrastructure for Transforming India”, our internet subscribers base is 343 million as on March 2016, broadband subscribers are 150 million and smartphones are over 220 million. Adoption of 4G will further boost the digital infrastructure. We believe that with healthy competition the cost to customers will reduce significantly in the coming years which will drive the adoption of digital payments.